Guidance for businesses that haven’t yet made Brexit preparations
Employers’ group IBEC pointed to the fact that only 27% of Irish businesses are using currency hedging , perhaps indicating that many Irish SMEs are not adequately prepared for Brexit, and may not even have begun to prepare.
Pierce Butler, Head of Sectors for Business Banking at Bank of Ireland outlines the basic factors that businesses that fall into this category need to consider.
“In trying to understand the impact that Brexit can have on their business, customers should look at a number of different areas.
“Firstly, the supply chain and the route to market. Where do their goods come from? Do they come from the UK, or through the UK?
“It’s important not just to look at your own suppliers, but also your supplier’s suppliers, in order to see the full impact on the supply chain.
“That applies to your route to market as well. Where do you sell your goods? And where do your customers in turn sell those goods?
“Secondly, businesses need to understand the impact that tariffs and non-tariff barriers could have. If tariffs were to apply, what rate would they be? Can you absorb it? Can you pass it on?
“For non-tariff barriers, for example border checks, what impact would delays in getting goods to market or in importing raw materials have on the business. w
“Businesses need to ask if they have knowledge gaps in their staff skillsets. This is especially relevant for businesses that currently only export to the UK and do not have the experience of exporting outside the EU and the logistical and documentary requirements associated with this. They may need to invest in developing that skillset within their staff.
“Thirdly, ask what the impact the first two could have on your cashflow. Is there going to be a requirement to pay tariffs? If so what impact would or logistical disruption have on your cashflow?
‘Companies should then also look at whether they can improve their efficiency. This would help offset the potential imposition of tarrifs.Or would greater efficiencies enable them to enter new markets in as competitive a position as possible?
“Finally, companies should look at whether there are any opportunities that arise as a result of Brexit.
“Who is your business’s competitor in the UK? What markets are they exporting to, either here in Ireland or mainland Europe, and is there an opportunity to displace those?
“And as companies throughout Europe ask themselves these questions as well, Irish companies might have an opportunity to supply them.
“While the eventual outcome of the Brexit process is unknown, we do know that there is a range of options, and it’s going to be one of those. So examine how each of those could impact your business across each of these headings.”
Pierce Butler is Head of Sectors for Business Banking at Bank of Ireland.
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